Over 1,900 Arizona Homeowners Victimized by Predatory Title Scheme
A controversial and potentially predatory title scheme known as Non-Title Recorded Agreements for Personal Services, or NTRAPS, has garnered the attention of legal authorities and lawmakers in Arizona. NTRAPS has faced bans in 16 states due to their concerning practices, which involve enticing homeowners with upfront payments of $500 to $1,000 while locking them into contracts that can last up to 40 years.
The scheme typically begins with an offer of a free market analysis of the homeowner’s property, accompanied by a payment to the homeowner. Once the homeowner signs the agreement, they receive the money and the analysis, often without fully understanding the long-term implications. These agreements stipulate that homeowners must use a specific company to list their homes for sale in the future, and failure to do so could result in a penalty of 3% of the home’s value.
Elizabeth Blosser, Vice President of Government Affairs for the American Land Title Association (ALTA), has described NTRAPS as a scheme to swindle homeowners out of their home equity. These agreements not only target homeowners but also their heirs, creating significant financial burdens.
In Arizona, NTRAPS remain legal and difficult to track. ALTA estimates that approximately 1,900 of these agreements exist in the state, but the actual number may be higher. The complexity arises because NTRAPS are recorded in a category that makes them challenging to identify, and the companies behind them often use multiple names.
Florida-based MV Realty is a major player in this industry and has faced investigations by attorneys general in seven states. MV Realty has presented this service as a “loan alternative,” but critics, including ALTA and the AARP, argue that it primarily targets seniors who may not outlive these long-term agreements, which can be unknowingly passed on to their descendants. MV Realty has also faced scrutiny from the FCC for using robocallers to target homeowners.
While Attorney General Kris Mayes’ office considered proposing legislation to address the issue, it was deemed too late in the process during the last session. There is hope that legislation proposed by Sen. John Kavanagh may be reintroduced in the coming session. ALTA and the AARP have been leading efforts to ban NTRAPS through legislation in multiple states. The proposed legislation in Arizona would also prohibit long-term exclusive agreements that create liens on homeowners’ properties and establish legal action related to false recordings.
The situation is evolving as MV Realty filed for bankruptcy, adding a new layer of complexity to the issue. However, both ALTA and the AARP believe that if the matter reaches lawmakers, it will have substantial support, as similar legislation has been approved with unanimous support in other states.
